Business Lines of Credit: On 11th March 2020, the World Health Organization (WHO) declared the novel coronavirus a pandemic. What started from the city of Wuhan, China has now managed to affect most of the world has spread to now 188 countries of the world.
Due to the severity of the situation, precautionary steps have been taken by most governments. Measurements to implement social distancing and lockdown of various institutions like schools, offices, restaurants or malls.
As a consequence of this, the economy worldwide is suffering from the most impact on the business world. This leading them to take business lines of credit. Businesses like that of retail, hotels, travel, electronics goods including many others seem to be most affected. This is because now the dependent customers are advised to sit at home.
So, in this case, taking business lines of credit is a must for most of these businesses so that they are able to pay their rents, invest in other activities or make payroll as well as preventing employee lay off and full-blown bankruptcy.
Business Lines of credit
have an advantage over loans as the interest rates are low to zero and this mostly depends on the credit score of the business. This means that the interest rates may be high for those businesses that do not have a good credit score along with missing out on better deals and vice versa.
Many industries, especially of small businesses, have seen great reductions in their revenues. And with this, it becomes more difficult for them to draw on business lines of credit.
Unlike a loan where the credit amount is borrowed all at once, business lines of credit have a preset amount with an option of using the whole amount or just part of it. And this is available at any time without the need for reapplying. This can be compared to using a credit card.